UK banking bonuses up as cap row looms

The amount of banking staff earning over 1 million euros ($1.36 million) soared last year in the United Kingdom, dwarfing that in other European Union member states.

The amount of high earners in the U.K. increased to 2,714 in 2012, according to a new report by the European Banking Authority (EBA) on Friday, a 11 percent rise from the 2,436 figure from the year before.

This compares to just 212 high earners in Germany, 177 in France and around 100 in Spain and Italy. The huge discrepancy is due partly to London's dominance as a financial center, attracting many finance workers from other European countries.

Salaries for U.K. banking staff also continued to see an impressive rise with average total pay ticking close to 2 million euros, up from 1.4 million euros from the year before. The high earners received bonuses that were around 3.7 times their base salary, compared to 3.5 times in 2011.

In France, high earners also received bonuses that are around 3.7 times their salary but that figure had dropped slightly from the year before. In Germany the figure was close to 2.1 times, a fall from 2.6 times in 2011.

"Most high earners were found to belong to categories that include functions with responsibilities throughout the whole institution, from the executive board, to risk management, internal audit, information technology, communication, auditing, corporate finance, legal and human resources," the report said.

This year EU regulators have been busy working on new rules on banking remuneration that take effect next year. The plan to cap bonuses for bankers earning more than 500,000 euros ($644,230) a year. These bankers will be unable to receive bonuses of more than one times their annual salary, although this can be extended to twice their salary with shareholder agreement.

The European Banking Authority estimates the cap will affect 4,796 staff across 23 banks.

The EBA said the Capital Requirements Directive (CRD) aims to ensure institutions' remuneration policies not only allow for sound and effective management, but also provide an incentive for prudent long-term risk taking in the sector.

The U.K., with its huge financial sector and long history of banking, is set to be the worst affected by the new rules. In September, the U.K's Treasury Department stated that it would mount a legal challenge against the cap on bankers' bonuses.